Texas lawyer sues Citibank over fake cheque scam A Houston lawyer is suing Citibank after being taken for $182,500 by email scammers claiming to be a debt-chasing Japanese company, Texas Lawyer reports. Richard T Howell Jr, of Buckley, White, Castaneda & Howell, fell for a classic cheque fraud scam. His "Japanese" contacts claimed they were pursuing four outstanding debts in …
Which in the US is a full 11 business days. Under the Expedited Funds Availability Act, there are various options available to the bank on the hold periods they use. Under Regulation CC, they can provide access the very next day or up to eleven business days from the date of deposit.
http://www.bankersonline.com/regs/229/229.html
The banks collectively do very little to help us identify them.
If they phone, they want personal details to identify you, but it is also common practice to sell off a debt to another company you may never have heard of, who may then demand money from you.
I hope this guy at least raises the awareness of how banks really dont give a **** about us.
Not that it was apparent from recent economic events.
I have a friend whose dad is loaded. He (my friend's dad) runs a business with a partner, and they have a security arrangement with their bank involving passwords and so on. He's known (as many entrepreneurs, I guess) not to suffer fools gladly. One day, some punter rang up the bank claiming to be him and requesting a large funds transfer. The bank guy asked for the password and got the response "I'm a busy man, dammit, just get on with or I'll close the account". He duly transferred the cash (!). Real account holder notices, rings up and is told "Oops, very sorry, we'll let you pay back the missing cash on easy terms". Account holder goes ballistic and says "I don't have any missing cash, that's out of the bank's pocket or I'm moving my account right now". He got his money back.
Next time I get a sales call from my bank I intend to do some social engineering to get them to give me confidential data on my account without doing a DPA (they pretty much did this to me once before but I was too pissed off and also busy to take advantage of it). If I can trip them into it again, I'm going to sue their ass off.
Howell claims that an employee of his firm "telephoned Citibank and verified that check number 310096829 in the amount of $367,500 was paid".
So (for the time assuming Citi was indeed contacted on this matter) he checked with the issuer of said check and got the OK.
I have no trouble believing this actually happened. Citi is in the news every month over here, and it always involves feeding false info to clients, charging extornionate interest, misleading customers about the guarantees on 'savings accounts' (which turn out to be Lehman guaranteed investment products) and so on and so forth.
"How does an educated professional fall for this?"
Easy. He rings up his bank and asks: "Has the cheque cleared" and the bank answers: "Yes".
When the cheque is subequently returned it's clear that the bank's "Yes" as not accurate. Hence he claims that Citibank are liable.
But, given the credit crunch why should a liar (or do I mean lawyer) expect banks to tell the truth.
To be fair there isn't a lot of detail in this article but I agree that this person was very foolish. However if he or his minion adhered to the protocol for checking funds in the company bank account and the bank told him the funds were there, then the banks were in no small part complicit in the cock up.
I've seen this sort of thing reported before. If you phone a bank, having paid in a cheque, and ask them if it's been paid, receiving a "yes" answer should mean that the funds *have* *actually* *fucking* *cleared*.
If the banks told the truth when asked a simple question, this sort of scam would be dead in the water. They should be under a legal obligation to point out, when asked such, the difference between "credited to your account" and "it's your money now" and *exactly* which state applies at the time of asking.
We have one Texas lawyer and one bank. The Texas lawyer got it in the bankbook for being as dumb as a box of rocks and the bank's being sued because..............well, that's what lawyers do.
Well there's my day gone. I'll spend it, sitting here in my boxicle, trying to work out which - the lawyer or the bank - I hope gets shafted in the court.
In the UK Banking System you need to ask if the cheque has "Cleared for value" before assuming the funds are available. Apparently that is that is much more definite than plain "cleared".
In any case if your knowingly receive "tainted money" you can end up in court under the Proceeds of Crime legislation. A legal professional should have been aware that he was entering into dodgy dealings in this case.
that is one great combo
that ass deserved it for being stupid ( and a lawyer) and too damn greedy( and a lawyer).
if he could not bother to actully do any checks on this chap that contacted him on behalf of this on company it IS his fault not the banks. as old addage goes if it is too good to be true it probably is!
as for the bank obviously the training program they have is well....
this lawsuit should be dissmised with no chance of appeal to get it reopened in any point in the future. why ? stupidity should not be rewarded.
if anything if this idiot can find the individuals involved he should work his butt off to get his money back and not sue the bank for his stupidity maybe he would learn something.
coat because i know stupidity is contegous especially when it comes from lawyers...
As I understand it, in the UK, if a cheque turns out to be a fake the bank can come back at any time (20 years later?) and deduct the money from your account. It doesn't matter whether the cheque has been "cleared" or not. So you should only accept cheques from people you trust or at least know well enough to be able to sue them. (Apparently a bounced cheque counts as good evidence of money owed so it's not all that hard to sue, if it's a real person, who isn't bankrupt, and you have the name and address.)
I'd like to hear how this washes out. It does seem that not only was this Texan duped, but to some extent Citibank as well? That seems like a new angle to the 419. Is tripping up the bank as easy as opening an account, writing a bogus cheque, then closing the account? Would Citi still, initially, claim that cheque was good?
Or is the answer more simple: was the employee that called Citi disgruntled and wanting to see his boss get shafted?
All Citibank could have done is confirm that there were funds in the account to meet the check. Which they did. Some time later, the account-holder spotted the unauthorized withdrawal and had it reversed. US businesses can print their own checks, and check printing software is easily bought. There's no genuine reason for anyone to ask you to bank a check, and ask for part of it to be sent on via Western Union.
And you certanly can con an honest man.
Fake charity scams, fake lottery scams, love scams, auction scams, etc. See www.scamwarners.com. Not all victims are motivated by greed.
"Hustle" and the "Grifters' Code" are fiction. Scammers are scum, no matter who they prey on.
Tombstone as I'd like to see them all six foot under.
Banks normally will never commit to funds being valid. About all they can ever tell you is that it has not turned up bad "yet". There is no point at which the bank is liable for a bad deposit.
The trouble with the scheme here is that the theif is beyond reach. And that the bad check and the "client" were working together.
It is very easy to fall for such a trap.
There are things you can do if you suspect bad money. But, if you are not suspecting such practices become weak. No oral statement from the bank is a certification of funds. You can take the physical check to the issuing bank and have them certify it. That was not done here. You can also take the check to the other bank and cash it. Also not done here. And if the bank is out of town or out of the country, those options are not readily available.
So about all you can do is deposit the money and wait, wait and wait. But, even weeks later it is unlikely that the bank will guarantee the funds are good. They are not in that business. They collect money for your convenience. They do not certify it unless you use one of their certification procedures. And only the issuing bank can certify it.
Yes, business would almost grind to a halt if everyone mistrusted funds given to them. You can do all kinds of things if you suspect bogus money. But, when you do not, you incurr a number of risks.
I have 8 framed cheques on the wall of my office, from scammers like these. Total value just over 6.5 Million $. Three cheques from the same scammer. I kept telling him/her/it that the cheque had not arrived and he/she/it kept sending me replacements.
It is a small expense to them, but the joy it brings to my life makes it all worthwhile. :)
Paris, because even she isn't STUPID enough to fall for these scams.
@Peyton: That would fail since the account wouldn't have the money available: the cheque would bounce straight away. Now, if you were to *deposit* a fake cheque, from a genuine account which had funds in, then withdraw the cash as soon as the cheque "clears", by the time the bank comes chasing you to reverse the deposit, it's too late: you've already withdrawn in.
It would be nice if you could actually guarantee that the cheque had irreversibly cleared, but then someone could just deposit the fake cheque into his own account when he knows the account holder is away on holiday - by the time he comes home, he's out of pocket permanently, which doesn't seem fair.
Of course, the real answer is not to use cheques in the first place, but some people seem to have an irrational attachment to paying with handwriting on bits of paper...
...there's always the story of Patrick Combs, who paid a junk mail cheque for $95000 in, and it legitimately cleared (the company had accidentally created a valid cheque). It's quite a good (although rather long) read: http://www.goodthink.com/writing/view_stories.cfm?id=11&page_id=2
"How does an educated professional fall for this? He works in law and he's NEVER heard of this scam? How much more greedy and stupid can lawyers get. I hope he loses and has to pay out even more money in law fees. He completely and utterly deserves it. Douchebag."
Who said he fell for it? Maybe got the email, did some thinking, and considers the $160,000 an worthwhile investment... seed money. As he stands to *make* $360,000 if the court agrees. He's a lawyer, and probably has an angle ;-)
If the lawyer had simply looked up phone numbers and email addresses for the Japanese company he was supposedly doing business with, he could have uncovered the truth by contacting the actual company (if it exists). Given that he thought he was only paying $182,500 out of the $367,500, he was expecting to keep over half the money. That would be a bit high for simply cashing a cheque. It isn't credible that this would be a legitimate transaction - for all he knew, he could have been laundering drug money. If he had to explain to the police why he presented a forged cheque to a bank, it would be interesting to know how he would explain the nature of his services.
Bank security is a total fucking joke. I actually had a bank until quite recently that didn't even bother to look at my ID (or even ask for it) when I went in to get money or transfer money. The tellers figured they could recognize customers on sight (and yes, they remembered the names too), and no they're *not* using any facial-recognition software either, so it was just the tellers *thinking* they recognized a customer. Not just me either - they did that with some other customers too (and that bank STILL does that with many customers). And no, I was NOT "friends with the tellers" or anything like that - I'd never seen those employees outside of the bank.
But it would be *SO* easy to convincingly impersonate someone else (I've quite successfully done that myself, for fun - not for misdeeds or bank-related activities though) - since the tellers were merely going by the person's manner of dress and hairstyle, eyeglass style, etc. Anyone sufficiently motivated could easily masquerade as someone else with just a little bit of effort, and...
And if you happened to know some other info about the person, such as their bank account # (like if the person had ever written you a check, or I guess it's "cheque" over there in England - think of all the people that you've gotten checks from, over the years... for those people that still use checks, anyway)... at least at that bank, all that was required to get money was the account # (numbers at bottom of the check).
So it wouldn't take much "social engineering" to do some mischief with the person's account, in those scenarios.
I often withdrew money from my own account using only one of the bank's BLANK withdrawal forms, not my own (name-imprinted) withdrawal forms (like if I'd left my checkbook at home, thus didn't have my own withdrawal forms handy - I don't know about England, but here in the States those are all in the same checkbook). So ANYONE ELSE could have done that too, if someone else *looked* enough like me that the tellers thought it was me.
I eventually switched banks for that and other blatant security-related problems and potential-problems. Security just isn't something that bank considers to be particularly important.
Perhaps irrelevant, but that particular bank branch belonged to one of the infamous recently-failed big banks that you've no doubt read about or heard of (it would be difficult to have *not* heard of that bank, even outside of the U.S.).
So just because a company is big, doesn't necessarily mean they have a clue what they're doing as far as security practices.
Anonymous because the bank still exists, under new, er, "ownership".
about this Lawyer.
He was/is obviously a greedy bastard.
Anyone with half a brain would realise that this was not a legal/ legitimate , honest , ethical or moral transaction.
This probably wont make him more honest, just more careful.
A lesson just learned by the now ex-governor of Illinois .
"And why exactly is he sueing Citibank? Should stupidity finally be rewarded?"
Well, he *thinks* he's got a case because he asked the bank if the check had gone through and was told "yeah it's fine". He doesn't ACTUALLY have a case, because the bank deposits checks provisionally then pulls the cash back out if the check proves to be counterfeit, and they are premitted by law to do this for.. 14 days? Maybe 30 days?
He should have known better, this is a standard part of this scam -- checks are not checked on-the-spot, asking the bank "is this real?" doesn't count for anything.
If I call a business, and they claim that something within their area of speciality is true, and I then act on this information - can I sue that business if it turns out they mislead me?
That's exactly what this lawsuit is about. The bank said "yes, the cheque has cleared" when in fact it had not in fact cleared.
Maybe instead of castigating the guy suing for being an idiot, it might be advisable to start having a good hard look at the bank for being unethical lying bastards at having given the guy wrong information about the status of a cheque?
Works by preying on the need (poor marks) and the greed (rich marks). You can't tell them that they are talking about getting something for nothing, because they simply wont belive you if they are that far down the line.
There is never a pot of gold, nobody ever got rich replying to such a scam (except the scammer),
Lawyer boy would have been guilty of money laundering even if the half witted plan had come to fruition. I hope the beak slings him in chokey for abuse of process and wasting the courts time. Strictly speaking of course he passed a dud cheque.... he could be busted in the absence of the Lads from Lagos if intent could be prooved.
The scammers do make nice, if occasionally venomous pets however and you can wind them up and waste their time endlessly with a bit of wit and patience.
Not only within their field of expertise- "Hello, mr Geographer, I've got a lump of rock, here's a photo and description, what is it?" "Granite" "No, it's marble. I'm suing you" style- but about their actual business, to one of their customers, about a significant amount of money and in a way that there should be a simple black/white answer to.
The banks are in the wrong here. If it was a little old lady rather than a lawyer- an AMERICAN lawyer at that- then everyone would be up in arms against the Bank.
the lawyer in question is not a victim but a fraudster himself ( impossible you say .. well :-)
The Japanese / Nigerian "crook "could be his ( lawyer's) accomplice.
So the money he's transfered is safe
AND
there is a potential to sue some extra bucks from the City.
Not a bad idea IMHO.
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